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Weak Management of a 

Climate Change Services 

Contract Creates Risk

EPA Did Not Receive Services 

for Which It Paid

Report No. 14-P-0272 May 30, 2014

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL
Report Contributors: Hilda Canes Garduño

Ming Chang

Eric Lewis

Byron Shumate

Abbreviations

COR Contracting Officer’s Representative

EPA U.S. Environmental Protection Agency

EPAAR EPA Acquisition Regulation

FAR Federal Acquisition Regulation

G&A General and Administrative

MPRs Monthly Progress Reports 

OAM Office of Acquisition Management

OARM Office of Administration and Resources Management

OIG Office of Inspector General

SOW Statement of Work

T&M Time-and-materials

Hotline Suggestions for Audits or Evaluations

To report fraud, waste or abuse, contact us 

through one of the following methods:

To make suggestions for audits or evaluations, 

contact us through one of the following methods:

email:

phone:

fax:

online:

write:

OIG_Hotline@epa.gov

1-888-546-8740

1-202-566-2599

http://www.epa.gov/oig/hotline.htm

EPA Inspector General Hotline 

1200 Pennsylvania Avenue, NW

Mailcode 2431T

Washington, DC 20460

email:

phone:

fax:

online:

write:

OIG_WEBCOMMENTS@epa.gov

1-202-566-2391

1-202-566-2599

http://www.epa.gov/oig/contact.html#Full_Info

EPA Inspector General 

1200 Pennsylvania Avenue, NW

Mailcode 2410T

Washington, DC 20460
 

14-P-0272

May 30, 2014

Why We Did This Review

The U.S. Environmental 

Protection Agency’s (EPA’s) 

Office of Inspector General

conducted this review to 

assess agency controls and 

processes for managing a timeand-materials (T&M) contract. 

We selected one contract to 

determine whether: (1) the EPA 

has procedures that require the 

verification of contractor 

personnel as having the 

qualifications and credentials 

specified in the contract; 

(2) the implementation of that 

verification process is effective; 

and (3) the EPA received the 

level of services for which the 

agency paid. 

The contract, EP-W-07-067

(“Technical and Outreach 

Support Services for Domestic 

and Global Climate Initiatives 

and Global Climate Change 

Programs”), was awarded by

the EPA’s Office of 

Administration and Resources 

Management.

This report addresses the 

following EPA goal or 

cross-cutting strategy:

 Embracing EPA as a highperforming organization.

For further information, contact 

our public affairs office at 

(202) 566-2391.

The full report is at:

www.epa.gov/oig/reports/2014/ 

20140530-14-P-0272.pdf

Weak Management of a Climate Change 

Services Contract Creates Risk EPA Did Not 

Receive Services for Which It Paid

 What We Found

The EPA lacks a process to verify that 

contractor personnel had the skill level to 

satisfy contract requirements. We reviewed all 

93 task orders for contract EP-W-07-067 and 

focused on task order 25. The task order 25 

review revealed several problems:

 The task order did not list any employees 

named in reviewed invoices. 

 The EPA repeatedly modified the task order to increase funding from an 

initial estimate of $310,917 to over $2,000,000.

 The contracting officer’s representative for task order 25 accepted the 

contractor’s deliverables without documenting a review of the contractor’s

personnel qualifications in comparison with the labor categories invoiced. 

 The task order was closed without all deliverables being met. 

In the contract we reviewed, the official contract file was incomplete, the 

determination and findings document did not properly justify the use of a T&M 

contract, a government-surveillance plan was not created, and a contracting 

officer’s representative improperly authorized the disposal of government 

property. There was almost no contract management after the contract was

awarded, and the contracting officer had little involvement with contract 

administration and delegated most tasks to the contracting officer’s 

representatives. Given the lack of oversight, contract administration and 

documentation, the EPA cannot verify that the contractor provided qualified staff 

for the execution of the contract, which created the risk of the agency not 

receiving services for which it paid.

 Recommendations and Agency Response

We made eight recommendations to the Assistant Administrator for 

Administration and Resources Management to improve, implement or address

agency oversight of contractor personnel, subcontractors, activities and invoices 

under T&M contracts; best practices for agency personnel when dealing with 

T&M contract administration; and questionable charges and improper disposal of 

government property for contract EP-W-07-067. The EPA has agreed with some 

recommendations and proposed some acceptable corrective actions. However, 

information on actions is incomplete and disagreements remain. Therefore, all 

recommendations are unresolved. In its final response to this report, the EPA 

must provide additional information, as described in this report, to resolve the 

report recommendations.

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

The EPA awards millions of 

federal dollars to contractors 

every year. It must have 

robust oversight and 

management controls in 

place to prevent waste and 

unnecessary spending.
May 30, 2014

MEMORANDUM

SUBJECT: Weak Management of a Climate Change Services Contract Creates Risk EPA 

Did Not Receive Services for Which It Paid 

Report No. 14-P-0272

FROM: Arthur A. Elkins Jr.

TO: Craig E. Hooks, Assistant Administrator

Office of Administration and Resources Management

This is our report on the subject evaluation conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the problems 

the OIG has identified and corrective actions the OIG recommends. This report represents the opinion of 

the OIG and does not necessarily represent the final EPA position. Final determinations on matters in 

this report will be made by EPA managers in accordance with established audit resolution procedures.

The EPA office having primary jurisdiction over the issues evaluated is the Office of Acquisition 

Management within the Office of Administration and Resources Management.

Action Required

In accordance with EPA Manual 2750, you are required to provide a written response to this report 

within 60 calendar days. You should include planned corrective actions and completion dates for all 

unresolved recommendations. Your response will be posted on the OIG’s public website, along with our 

memorandum commenting on your response. Your response should be provided as an Adobe PDF file 

that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as 

amended. The final response should not contain data that you do not want to be released to the public; 

if your response contains such data, you should identify the data for redaction or removal along with 

corresponding justification. We will post this report to our website at http://www.epa.gov/oig.

If you or your staff have any questions regarding this report, please contact Carolyn Copper, 

Assistant Inspector General for Program Evaluation, at (202) 566-0829 or copper.carolyn@epa.gov; 

or Eric Lewis, Director, Special Program Reviews, at (202) 566-2664 or lewis.eric@epa.gov. 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
Weak Management of a Climate Change Services Contract 14-P-0272

Creates Risk EPA Did Not Receive Services for Which It Paid 

Table of Contents

Purpose ..................................................................................................................... 1

Background ............................................................................................................... 1

Rules and Guidance Governing EPA Contracting............................................... 1

Time-and-Materials Contracts............................................................................. 1

Responsible Headquarters Office ....................................................................... 2

Responsibilities of the Contracting Officer .......................................................... 2

Responsibilities of the Contracting Officer’s Representative ............................... 3

Verification of Contractor Personnel Qualifications ............................................. 4

Scope and Methodology........................................................................................... 4

Prior Evaluation and Audit Coverage ...................................................................... 5

Results....................................................................................................................... 6

EPA Does Not Require Verification of Contractor Personnel 

 Qualifications for Time-and-Materials Contracts ............................................ 6

Contractor Personnel Discrepancies Exist at Multiple Levels 

 of the Contracting Process............................................................................. 7

EPA Cannot Verify Accuracy of Invoiced Charges.............................................. 7

Task Order 25 Deliverables Were Vaguely Defined, 

 Outside of Scope and Untimely..................................................................... 10

Other Issues ....................................................................................................... 11

Conclusions............................................................................................................... 14

Recommendations .................................................................................................... 15

Agency Comments and OIG Evaluation .................................................................. 15

Status of Recommendations and Potential Monetary Benefits ............................. 17

Appendices

A Agency Response to Draft Report .................................................................. 18

B OIG Response to Agency Comments ............................................................. 23

C Distribution ...................................................................................................... 29
14-P-0272 1

Purpose

The purpose of this review was to assess the controls and processes for managing 

a time-and-materials (T&M) contract at the U.S. Environmental Protection Agency

(EPA). The Office of Inspector General (OIG) selected one T&M contract to 

determine whether:

 The EPA has procedures requiring verification that contractor personnel 

have the qualifications and credentials specified in the contract.

 The implementation of that verification process is effective.

 The EPA received the level of services for which it paid.

Background

A broad range of contract types is available to the government and contractors to 

provide needed flexibility in acquiring the large variety and volume of supplies 

and services that agencies require. Contract types vary according to:

 The degree and timing of the responsibility assumed by the contractor for 

the costs of performance.

 The amount and nature of the profit incentive offered to the contractor for 

achieving or exceeding specified standards or goals. 

Rules and Guidance Governing EPA Contracting 

The Federal Acquisition Regulation (FAR) is the primary regulation for use by all 

federal executive agencies in their acquisition of supplies and services with 

appropriated funds. The FAR limits agency acquisition regulations to those 

necessary to implement FAR policies and procedures within an agency. The EPA 

Acquisition Regulation (EPAAR) implements and supplements the FAR. The 

EPA’s Contracts Management Manual is an agencywide directive that provides 

guidance primarily to program office personnel. 

Time-and-Materials Contracts

According to FAR 16.601(b), a T&M contract is one in which supplies or services 

are acquired based on: (1) direct-labor hours at specified fixed hourly rates that 

include wages, overhead, general and administrative (G&A) expenses, and profit;

and (2) actual cost for materials. The FAR also stipulates in 16.601(c) that a T&M 

contract may be used as a contract vehicle only when it is not possible to 

accurately estimate the extent or duration of the work, or to anticipate costs with 

any reasonable degree of certainty. As such, a T&M contract may be used only 

after the contracting officer produces a “determination and findings” document, 

which verifies that no other contract type is suitable. As of August 2012, the EPA 

had 735 active contracts, of which 142 (about 19 percent) were T&M and labor-
14-P-0272 2

hour contracts.

1 The EPA’s contract obligations for all active contracts totaled 

over $4.6 billion, of which $1.85 billion (40 percent) were obligated to T&M and 

labor-hour contracts.

Responsible Headquarters Office

Within the EPA’s Office of Administration and Resources Management (OARM), 

the Office of Acquisition Management (OAM) is responsible for policies, 

procedures, operations and support of the agency’s procurement and contracts 

management program—from contract planning through closeout. 

Responsibilities of the Contracting Officer 

According to FAR 1.601, a contracting officer is the only person who can enter 

into and sign off on contracts on behalf of the government. The contracting officer 

also has the authority to enter into, administer and terminate contracts, and to 

make related determinations and findings. FAR 1.602-1(b) states:

No contract shall be entered into unless the contracting officer 

ensures that all requirements of law, executive orders, regulations, 

and all other applicable procedures, including clearances and 

approvals, have been met.

The FAR also provides instruction for what contract files should contain, 

including the original signed contract, modifications, and any additional 

documents that reflect actions taken by the contracting office. The EPA’s 

Contracts Management Manual requires the contracting officer to maintain the 

official contract file through closeout. 

FAR 1.602-2 outlines the full weight and scope of a contracting officer’s

responsibilities:

Contracting officers are responsible for ensuring performance of 

all necessary actions for effective contracting, ensuring compliance 

with the terms of the contract, and safeguarding the interests of the 

United States in its contractual relationships. In order to perform 

these responsibilities, contracting officers should be allowed wide 

latitude to exercise business judgment.

Furthermore, FAR 1.102-4(a) states:

... the contracting officer must have the authority to the maximum 

extent practicable and consistent with law, to determine the 

application of rules, regulations, and policies, on a specific contract.

 

1 FAR 16.602 defines a labor-hour contract as a variation of a T&M contract, differing only in that materials are not 

supplied by the contractor.
14-P-0272 3

In undertaking this effort, many contracting officers rely on the contribution of 

numerous financial, legal and technical experts to assist them.

Responsibilities of the Contracting Officer’s Representative 

Due to the size and complexity of agency acquisitions, contracting officers

frequently appoint qualified individuals to assist in contract administration, 

known as contracting officer’s representatives (CORs). The COR is an authorized 

representative of the contracting officer who is nominated by the program office;

appointed by the contracting officer; and possesses the necessary knowledge, 

skills and abilities to perform COR duties. Although appointed by a contracting 

officer, a COR does not have the authority to enter into contractual agreements or 

amendments. CORs may perform only those functions appointed to them, and 

must not take any action reserved for the contracting officer, such as:

 Promise or authorize the contractor to perform work that is in addition to 

or outside the scope of the contract, work assignment, or delivery or task 

order.

 Conduct negotiations or bind the government by making any written or 

oral agreements with contractors.

 Directly or indirectly change:

o Pricing, cost or fee. 

o Scope of the acquisition (i.e., the contract, purchase order, work 

assignment, delivery, task order, etc.).

o Delivery schedule or period of performance.

o Labor mix or level of effort.

o Any terms or conditions of the acquisition.

 Redelegate or reassign COR authority.

 Authorize government-furnished property or its disposition.

 Direct the contractor to start work or issue stop-work orders.

The contracting officer may appoint a contract-level COR, as well as a task-order 

COR. For each task order, the contracting officer may instruct the task-order COR 

to draft the statement of work (SOW) to identify the work that the EPA wants the 

contractor to perform, as well as the independent government cost estimate on 

how much the work might cost. Once the task order is issued, the task-order COR 

may also be tasked with monitoring the contractor’s performance to ensure that 

the EPA obtains a quality product on time and within cost. Monitoring includes 

giving technical direction, reviewing deliverables, and reviewing monthly 

progress reports (MPRs) and invoices.

CORs should ensure that the skill level and labor mix provided by the contractor 

(i.e., contractor personnel qualifications) meet the specifications in the contract.

According to the EPA’s Contracts Management Manual, this is accomplished by 

reviewing invoices and MPRs to ensure that the contractor uses the labor skill mix 

(i.e., labor categories and hours) necessary to fulfill government requirements. 
14-P-0272 4

Within a labor category, actual wages or salaries vary from one employee to 

another, with the more experienced and skilled employees earning higher wages 

or salaries. If a contract stipulates the need for labor at a particular experience or 

skill level but a contractor uses lower-paid, less-experienced and less-skilled 

workers in a labor category, performance may be less efficient or adversely 

impacted. Additionally, the contractor will be paid for a level of service not 

delivered. 

Verification of Contractor Personnel Qualifications 

The EPA’s regulations and guidance do not specifically require the agency to 

verify contractor staff qualifications or provide procedures for doing so. However, 

the regulations and guidance do oblige the EPA to make some assessment of 

contractor personnel qualifications, obtain resumes of contractor personnel, or 

evaluate contractor personnel qualifications. For example:

 For T&M contracts, FAR 52.232-7(a) requires hourly rates to be paid for 

all labor performed on the contract that meets the labor qualifications 

specified in the contract. Under 11.2.3 of the EPA’s Contracts 

Management Manual, the contracting officer has ultimate responsibility 

for invoice processing under individual contracts. However, OAM’s 

policy of not verifying contractor personnel qualifications and labor rates 

is inconsistent with the FAR.

 Text from chapter 3 of the EPA’s Contracting Officer’s Representative 

(COR) Basic Training Course Text advises that CORs should consider 

contractor personnel qualifications and can ask the contractor to submit 

resumes of proposed personnel.

 The EPA’s Contracts Management Manual, 16.2.5.6(A), states that the 

technical component of an offer should include a staffing plan, as well as 

resumes of key personnel (if key personnel are identified).2

 When deciding to award a contract, FAR 15.305(a)(2)(iii) requires the 

agency to evaluate relevant predecessor companies, proposed key 

personnel or proposed subcontractors as a selection criterion.

 When issuing a contract, EPAAR Section 1552.237-72 requires the 

contracting officer to insert a contract clause naming key personnel, and 

requires the contractor to notify the contracting officer in the event of key 

personnel replacement.

Scope and Methodology

We conducted our review from June 2011 through October 2013, in accordance 

with generally accepted government auditing standards issued by the Comptroller 

General of the United States. Those standards require that we plan and perform 

the review to obtain sufficient, appropriate evidence to provide a reasonable basis 

 

2 Key personnel are individuals who have major contract responsibilities or provide unusual or unique expertise.
14-P-0272 5

for our findings and conclusions based on our objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions

based on our review objectives.

We selected one T&M contract for review: EP-W-07-067 (“Technical and 

Outreach Support Services for Domestic and Global Climate Initiatives and 

Global Climate Change Programs”), which was issued by OARM. We chose to 

review this contract due to its dollar value. Based on OAM’s active contract list at 

the time we began the review, and as of August 2011, $25.10 million has been 

obligated and $25.05 million paid.

3 The contract may not exceed $30.9 million. 

We conducted interviews with relevant EPA staff from OARM, the Office of the 

Chief Financial Officer, and the Office of Air and Radiation. This included 

interviews with the contracting officer for the contract and the COR for task 

order 25. We obtained and reviewed contract documents, including the pre-award 

file, award file, all task orders (totaling 93), and 11 MPRs and associated invoices 

for task order 25 submitted from October 2010 through September 2011. We 

chose task order 25 for further review due to its high cost of over $2 million. We 

also reviewed the regulations and agency guidance pertaining to the management 

of T&M contracts. 

Prior Evaluation and Audit Coverage 

The following OIG reports addressed issues related to the scope of our review:

 Report No. 09-P-0242, Contractor Invoice Internal Controls Need 

Improvement, September 23, 2009.

 Report No. 10-R-0113, EPA Should Improve Its Contractor Performance 

Evaluation Process for Contractors Receiving Recovery Act Funds, 

April 26, 2010.

 Report No. 12-P-0320, Policies Needed for Proper Use and Management 

of Cost-Reimbursement Contracts Based on Duncan Hunter Act, 

March 6, 2012.

 Report No. 12-P-0407, Great Lakes National Program Should Improve 

Internal Controls to Ensure Effective Legacy Act Operations, 

April 9, 2012.

 Report No. 13-P-0208, EPA Should Increase Fixed-Price Contracting for 

Remedial Actions, March 28, 2013.

 Report No. 13-P-0209, Opportunities for EPA-Wide Improvements 

Identified During Review of a Regional Time and Materials Contract, 

April 4, 2013.

 

3 As of September 18, 2013, this was the most current information available from the EPA Compass Data 

Warehouse.
14-P-0272 6

Results

Weak management and oversight of contract EP-W-07-067 put the EPA at risk of 

not receiving services for which the agency paid. We found the agency has no 

uniform process in place to verify contractor personnel qualifications. Absent a 

process, we found contractor personnel discrepancies throughout the contract 

files. We also found that the EPA could not verify the accuracy of invoiced 

charges.

Analysis of monthly invoice subsamples revealed problems with labor costs, 

G&A costs, and subcontractor costs. Task order 25 deliverables were vaguely 

defined, outside of scope and untimely. From an initial cost ceiling of $310,917, 

task order 25 costs grew to more than $2,000,000, and the period of performance 

was extended by almost 3 years. Task order 25 closed without all deliverables 

being met, and another task order was opened, in part, to address lingering items.

During the course of our review, we identified problems beyond those associated 

with our objectives. We found a lack of proper records management for the 

selected contract. The determination and findings document did not justify the use 

of a T&M contract. The agency also did not create the quality assurance 

surveillance plan required of a T&M contract. Finally, we found that the task 

order 25 COR improperly authorized the disposal of government property.

EPA Does Not Require Verification of Contractor Personnel 

Qualifications for Time-and-Materials Contracts

We found that the agency has no uniform process in place to verify contractor 

personnel qualifications. OAM management told us the contractor is responsible 

for ensuring that all staff, other than key personnel, are qualified to perform work 

under the contract. Rather than verifying contractor qualifications, EPA staff 

stated they relied on personal judgment and information contained in the contract. 

A contracting officer we interviewed told us that verifying the qualifications of

contracting staff billed under the contract was not required; it was the contractor’s 

responsibility to find qualified personnel for a given contract. The COR for task 

order 25 also told us that verifying the qualifications of contractor staff was not 

required because the field was small and there was familiarity with those working

in the field.

4

 

4 OIG Report No. 13-P-0209 recommended that OAM require task order CORs to evaluate the qualifications of 

contractor key staff proposed by the contractor in the work plan, and to review qualifications for samples of non-key 

staff billed on invoices. This recommendation has been resolved with OAM. Therefore, we did not make a similar 

recommendation in this report.
14-P-0272 7

Contractor Personnel Discrepancies Exist at Multiple Levels of the 

Contracting Process

We found that the documentation of contractor and related personnel 

qualifications was insufficient for both contract-level modifications and the 

contract-level proposal. The contract formally named only two contractor 

employees—the program manager and the deputy program manager—as key 

personnel, while the contract and contract-level modifications approved the use of 

23 subcontractors and 31 consultants. In addition, the contractor’s proposal named 

nearly 200 employees, but only 111 employee resumes were included. OAM 

management confirmed that it only requires key personnel to be named.

We examined the 93 task orders issued under the contract and found additional 

personnel issues. For example:

 We were unable to determine which contractor employees managed 23 of 

the 93 task orders because the information was not contained in task order

files.

 The contract-level documentation did not name 69 percent of the 

employees proposed for task-order work, including six managers; 

46 percent of all consultants and subcontractors named in the task orders 

were not named and approved in either the contract or contract-level 

modifications.

 We could not properly account for many contractor employees named in 

the task orders. Of the 178 employees named in task-order files, 46 lacked 

labor classifications. Task orders provided some sort of description for 

most named employees, but we were unable to find resumes for 158 of 

178 employees. Five employees named in the task orders lacked 

descriptions or resumes.

We also noted problems involving contractor personnel in our focused review of 

task order 25 and invoices. Task order 25 documentation did not name any of the 

23 employees billed in the invoices. Of these 23 employees, 9 accounted for 

70 labor hours and $10,169 charged, but none of the 9 employees were named 

anywhere in the contract documentation. In addition, the contractor charged 

2,462 labor hours and $370,765 to labor categories under a subcontractor not 

given subcontracting consent by EPA. 

EPA Cannot Verify Accuracy of Invoiced Charges

We found invoice and MPR reviews lacking at the contracting officer and COR 

levels. The contracting officer told us that invoice review was conducted solely by 

the CORs. The COR for task order 25 did not document his review of MPRs, 

invoices or deliverables. Analysis of monthly invoice subsamples revealed 
14-P-0272 8

problems with labor, G&A and subcontractor costs. Overall, we found that the 

contracting officer and the COR were unable to track invoiced costs against 

activities reported in MPRs. OAM management confirmed that it does not require 

contracting personnel to verify invoices. Specifically, it was the contractor’s 

responsibility to ensure that the invoices were correct.

Labor Costs

Review of task order 25 labor invoices disclosed the following 

questionable costs:

 The task order did not list any of the 23 employees named in the 

invoices, and nine employees (accounting for 70 labor hours and 

$10,169 charged) were not named elsewhere in the contract file.

 The contractor charged 2,462 labor hours and $370,765 to labor 

categories under a subcontractor not given subcontracting consent

by EPA, which accounted for 86 percent of labor cost. 

 In two instances, contractor employees charged for labor at a 

higher-paying labor category than the category listed for the 

employee in the contract file. For two other contractor employees, 

labor rates inexplicably increased between monthly invoices. There 

is no documentation to show that the contracting officer approved 

these increases.

When we noted that work was billed by a subcontractor whose name never 

appeared in the approved subcontractor list, the contracting officer and 

COR both explained that the subcontractor had been previously known by 

another name that was listed. When we asked the contracting officer about 

verification of the subcontractor name change, we were provided with a 

2010 letter from the subcontractor giving notice of a name change. 

However, the previous name did not match the name of the approved 

subcontractor in the contract. No name change was documented in a 

contract modification. When we asked why there was no modification to 

explain the name change, the COR said that as long as he knew the 

subcontractor the lack of documentation did not concern him.

The contracting officer for the selected contract had little involvement in 

contract administration and delegated most duties, including invoice 

review, to the program office CORs. The COR for task order 25 relied on 

informal methods to determine whether the EPA was properly invoiced 

and contract specifications for deliverables were met. However, the COR 

did not document the review of invoices or the contractor’s monthly 

progress. Consequently, the effectiveness of the COR’s review cannot be 

verified. 
14-P-0272 9

In the absence of consistent documentation on the contractor’s monthly 

progress and the quality of deliverables, the EPA is at risk of not knowing 

whether: (1) contractor performance was adequate, (2) the contractor was 

performing work within an estimated cost, or (3) properly qualified 

individuals were performing the work.

In the event another COR has to take over this task order, there is no 

documentation of past performance with which the new COR can verify 

the qualifications of contractor personnel or the quality of the deliverables. 

G&A Costs

We found the agency vulnerable to being double charged for G&A 

expenses. The contract language not only states that G&A expenses 

should be calculated into established labor rates, the language also 

establishes that “G&A/material-handling expenses” for other direct costs 

may also be applied. The additional G&A expenses listed in the invoices 

are in a separate section and unrelated to either the labor hour or the other 

direct costs sections. Furthermore, these charges are not explained 

elsewhere in the MPRs or invoices. When asked, the contracting officer

was unable to clarify these issues. Based on the invoices we sampled for 

task order 25, we found $5,590 in questionable G&A expenses.

Subcontractor Costs

The lack of proper oversight created vulnerability to subcontractor 

overcharges. The contract states that invoiced charges for subcontracts 

shall be further detailed in a supporting schedule that shows major cost 

elements for each subcontract. However, we were unable to locate any 

such detail in the invoices. In addition, two of the three subcontractors 

named in the MPRs were not listed in contract documentation as approved 

subcontractors. Based on the invoices we sampled for task order 25, we 

found $163,969 in questionable subcontractor charges.

EPA Does Not Require the Contractor to Justify Lagging Costs

We could not track invoiced costs against activities reported in 

corresponding MPRs. For subcontractor labor, numerical labor hour 

estimates were not supplied alongside the work summaries from MPR 

subcontractors. When supplied for contractor labor, these estimates were 

exceeded by invoiced amounts. Specifically, tracking expenses was 

confounded by the accumulation of “lagging costs,” which were defined 

by the contracting officer as costs that have been incurred during the 

billing period associated with the invoice but have not yet been included in 

the invoice. 
14-P-0272 10

However, we found repeated instances where invoices would partially 

cover expenses from previous reporting periods without stating to which 

activities or reporting periods the invoiced quantities applied. As a result, 

it was not possible to match any invoiced charge with any specific activity 

described in a current or previous MPR—making it difficult to determine 

if the charges are legitimate. 

The EPA’s contracting personnel were unable to adequately explain these 

issues. The COR for task order 25 said lagging costs were tracked 

informally (i.e., the COR used professional knowledge of material costs,

and discerned the quality of deliverables and matched them to the labor 

categories billed). However, the COR could not provide documentation to 

demonstrate the accuracy of this method. When asked, the contracting 

officer showed a lack of understanding with respect to how lagging costs 

were actually tracked. 

Task Order 25 Deliverables Were Vaguely Defined, Outside of Scope 

and Untimely

The task order 25 file did not clearly describe expected deliverables. The 

deliverables were delayed, subject to vague timelines, and at times progress 

toward the completion of the deliverables was inadequately explained. The EPA 

repeatedly modified task order 25 to increase funding. From an initial cost ceiling 

of $310,917, task order 25 costs grew to over $2,000,000, and the period of 

performance was extended by almost 3 years. Task order 25 closed without all 

deliverables being met, and another task order was opened, in part, to address

lingering items. 

We found that task order 25 paperwork was too disorganized to clearly determine 

task order deliverables. The agency never specified which of the three SOWs 

present in the task order 25 file was being followed (each SOW specified different 

deliverables). When the EPA issued its proposal request for task order 25, the 

agency included a preliminary SOW for prospective contractors. The contractor

also submitted a more detailed, tentative SOW as part of its proposal to win task 

order 25. The EPA’s official task order documentation makes no mention of the 

contractor’s SOW, but includes a copy of the EPA’s preliminary SOW. In 

addition, we found a revised contractor-prepared SOW with the paperwork for 

task order modification 2, but the EPA modification documentation again failed to 

reference this revision. 

The COR for task order 25 did not ensure that contractor deliverables were 

consistent with the deliverables listed in the SOWs. For instance, without a 

contracting officer’s endorsement, the COR approved the addition of two 

deliverables outside of the SOWs. The COR also approved the removal of two 

deliverables without a contracting officer’s endorsement. There was no 
14-P-0272 11

documented contracting officer’s approval for either of these actions in the task 

order 25 file. By authorizing the completion of deliverables not listed in the 

SOWs, and by agreeing to cancel deliverables that were in fact listed in the 

SOWs, the COR made unauthorized commitments.

Deliverables were plagued with delays and uncertain timelines. In the MPRs 

made available to us, we found that four draft subtask-level deliverables were at 

least 18 months late. The contractor failed to supply delivery dates for six other 

draft deliverables within the same subtask. Revised and final deliverables within 

this subtask were due within 2 weeks of receiving comments. However, these 

deadlines are not discernible because the MPRs do not include the dates the 

comments were received. As of the projected completion date for task order 25, 

one final deliverable had not been received.

We found that deliverables associated with another subtask could not be clearly 

tracked with the information we were given. Numerous subtasks described in the 

MPRs were never attributed to their applicable SOW task or subtask. In addition, 

there was nothing in the MPRs to suggest that another task had been completed or 

any of the deliverables supplied.

The contracting officer for the selected contract did not properly administer the 

contract and oversee the work being conducted by the COR. The contracting officer

seemed unaware of the actions taken by the COR for task order 25, and explained 

that the Office of Air and Radiation preferred that contracting officers not contact 

CORs directly but instead communicate through an Office of Air and Radiation

contract-level COR. Although the selected contract was in its final few months, the 

contracting officer had not met the task order 25 COR in person at the time of our 

review, even though both individuals were located in Washington, D.C. 

Other Issues

During the course of our review, we identified problems beyond those associated 

with our objectives.

Contract Files Were Incomplete

We found a lack of proper records management for the selected contract. 

The maintenance of complete and accurate project files is essential for

managing all contractor work. The FAR provides instruction for what 

contract files should contain. The EPA’s Contract Management Manual

lists contracting officer responsibilities, which include maintaining the 

official contract files through contract closeout. FAR 4.801(b) states that 

the documentation in files shall be sufficient to constitute a complete 

history of the transaction for the purpose of: 
14-P-0272 12

 Providing a complete background as a basis for informed decisions 

at each step in the acquisition process.

 Supporting actions taken.

 Providing information for reviews and investigations.

 Furnishing essential facts in the event of litigation or congressional 

inquiries. 

FAR 4.803(a) and 4.803(b) provide examples of records normally 

contained in contract files. These records include a copy of the contract 

and all modifications, performance and payment documents, documents 

pertaining to actions taken by the contracting officer, quality-assurance 

documents, and cross-references to other pertinent documents filed 

elsewhere. 

The contracting officer was unable to locate or produce copies of the 

following documentation:

 The original, signed contract.

 Signed, contract-level modifications.

 MPRs and associated invoices for the years prior to the contracting 

officer’s assignment to the contract.

 The MPR and associated invoice for April 2010 (part of the year’s 

worth of MPRs and associated invoices that we requested for 

review), during which the contracting officer was assigned to this 

contract.

When the contract file is incomplete, the ability to make informed 

decisions about a contract is compromised, increasing the risk of waste

and fraud. For example, without MPRs, the EPA cannot verify whether the 

$25.05 million paid was appropriate. Similarly, the EPA cannot check 

approved subcontractor identities and subcontracting procedures against 

those proposed for task orders without a copy of the contract file and 

modifications. 

Determination and Findings Document Did Not Justify 

Use of T&M Contract

A determination and findings document is necessary to use a T&M

contract. However, the determination and findings lacked elements

required to justify the use of a T&M contract.

FAR 16.601(d)(1) states that a T&M contract may be used only if the 

contracting officer prepares a determination and findings that says no 

other contract type is suitable. However, the determination and findings 

document made no mention of T&M and concluded that the contract be 

awarded on a fixed rate, indefinite-delivery/indefinite-quantity basis.
14-P-0272 13

Moreover, the determination and findings must be approved by the head of 

the contracting activity when the contract base period (plus any optional

periods) exceeds 3 years, which was the case with the selected contract. 

The “head of the contracting activity” is a role assigned to the director of

OAM in Section 1.2.4(D) of the EPA’s Contract Management Manual. In 

the case of the selected contract, the determination and findings document

was never approved by the head of contracting, but by a previous 

contracting officer.

In addition, FAR 12.207(c)(3) states that if an indefinite-delivery contract 

only allows for the issuance of orders on a T&M or labor-hour basis, the 

determination and findings must be executed to support the basic contract

and: (1) explain why providing for an alternative firm, fixed price or fixed

price with an economic price adjustment pricing structure is not 

practicable; and (2) be approved one level above the contracting officer.

The EPA never addressed these aspects.

EPA staff said T&M was necessary for this contract because contract task 

orders contained too many unknown and unforeseen factors. The OIG 

agrees that firm, fixed-price contracts lend themselves to a well-defined

scope of work and that not all tasks can be firm, fixed price. However, we 

do not agree with the EPA that the contract did not lend itself to firm,

fixed pricing, given how many years the same services have been 

performed. The lack of proper contract planning and oversight on the part 

of OAM and the program office resulted in a determination and findings 

that inadequately justified the use of the T&M contract. Therefore, the 

EPA is not taking the required steps to show that it is using fixed-price 

contracting to the maximum extent possible.

Government Surveillance Plan Was Never Created 

The EPA did not create a government quality assurance surveillance plan 

for this contract although the FAR requires one for T&M contracts. 

When asked why there was no surveillance plan, the contracting officer

responded that the contract clauses constitute the surveillance plan. 

We believe the contract clause does not provide surveillance, but rather 

documents contract requirements. In the absence of a government 

surveillance plan, there is a lack of assurance that costs were fair and 

reasonable, that work was performed to government standards, or that 

deliverables described in the SOWs were delivered by the contractor as 

agreed to in the contract.
14-P-0272 14

Task Order 25 COR Improperly Authorized Disposal of 

Government Property

The task order 25 COR improperly authorized the disposal of government 

property. At the conclusion of a project, the COR authorized the foreign 

parties using the supplies to keep or sell property too expensive to ship 

back to the United States or deemed beyond acceptable re-use. We found 

no documented inventory of contractor-purchased materials or records 

showing disposal actions. The contracting officer did not know the COR 

had given away the property until the contractor relayed the information.

FAR 45.402(b) establishes that, under a T&M contract, the government 

acquires title to all property for which the contractor is entitled to

reimbursement as a direct item of cost under the contract. Under EPAAR

Section 1552.245–70(b)(10), the contractor is required to update all 

property records to show disposal action. A corresponding clause was 

found in the contract as well.

CORs may perform only those functions appointed to them and must not 

take any action reserved for the contracting officer—such as the disposal 

of government property. The COR appointment memo, signed by the COR

for task order 25, clearly forbids the COR from authorizing delivery or 

disposition of government-furnished property. The contracting officer for 

the selected contract did not properly administer the contract and oversee 

the work being conducted by the COR.

Conclusions

For the T&M contract reviewed, the EPA cannot determine the accuracy of 

invoiced charges. The EPA did not properly keep contract files, and had no

formal process to ensure the integrity of contract files when they were transferred 

between contracting officers. In addition, OAM did not properly oversee aspects 

of the contract’s pre-award phase, improperly justifying the use of a T&M 

contract and failing to include the FAR-required government quality assurance 

surveillance plan. The EPA conducted almost no contract management after the 

contract was awarded because the contracting officer had little involvement in 

contract administration, choosing instead to delegate most tasks to the CORs.

Given the lack of oversight, contract administration and documentation, the EPA 

cannot verify if the contractor provided qualified staff for the execution of the 

selected contract.

Based on the small number of invoices we sampled for task order 25, we found 

questionable costs, including G&A expenses totaling $5,590 and subcontractor 

charges totaling $163,969.
14-P-0272 15

Recommendations

We recommend that the Assistant Administrator for Administration and 

Resources Management:

1. Require that activities, personnel and subcontractors proposed by 

contractors at the contract and task order levels be officially endorsed in 

task order documentation.

2. Require that changes in contractor personnel and subcontractors at the 

contract and task order levels are officially established by modification.

3. Require that CORs document a thorough and consistent review of work 

plans, MPRs, invoices, receipts and deliverables.

4. Beginning with the questionable G&A expenses ($5,590) and 

subcontractor charges ($163,969) in the invoices we sampled, conduct a 

review of all invoices from contract EP-W-07-067 to determine if the EPA 

overpaid for G&A costs, other direct costs, lagging costs and 

subcontracting costs.

5. Develop and implement procedures to maintain a complete contract file

when transferred between contracting officers.

6. Require that T&M contracts abide by FAR requirements, such as having a

determination and findings document and a government quality assurance

surveillance plan.

7. Conduct a contract-wide review of contract EP-W-07-067 to determine if

government property was improperly disposed.

8. Develop and implement new or additional training for EPA acquisition

personnel to communicate new requirements or expectations that arise 

from the recommendations and findings in this report.

Agency Comments and OIG Evaluation

The action official concurred with recommendations 3, 4, 5, 6, 7 and 8 but did not 

provide a position (agreement or disagreement) for recommendations 1 or 2. We 

consider all eight recommendations to be unresolved. For recommendations 4 

and 7, the agency did not supply an estimated completion date for its planned 

corrective actions. Recommendations 1, 2, 3, 5, 6 and 8 require corrective action 

revisions along with estimated completion dates once acceptable corrective 

actions are identified. The agency’s comments on the draft report are in 

appendix A and the OIG’s detailed responses to the agency’s draft report 

comments are in appendix B.
14-P-0272 16

Prior to issuing this final report, we met with OARM staff and officials to discuss 

their draft report comments, communicate the OIG’s information needs, and 

attempt to reach resolution on the recommendations. However, OARM could not 

provide the OIG the additional information without repeated extensions, leading

to delays in issuing our report. The agency needs to address the unresolved

recommendations in its response to the final report.
14-P-0272 17

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 15 Require that activities, personnel and 

subcontractors proposed by contractors at the 

contract and task order levels be officially endorsed 

in task order documentation.

U Assistant Administrator for 

Administration and 

Resources Management

2 15 Require that changes in contractor personnel and 

subcontractors at the contract and task order levels 

are officially established by modification.

U Assistant Administrator for 

Administration and 

Resources Management

3 15 Require that CORs document a thorough and 

consistent review of work plans, MPRs, invoices, 

receipts and deliverables.

U Assistant Administrator for 

Administration and 

Resources Management

4 15 Beginning with the questionable G&A expenses 

($5,590) and subcontractor charges ($163,969) in 

the invoices we sampled, conduct a review of all 

invoices from contract EP-W-07-067 to determine if 

the EPA overpaid for G&A costs, other direct costs, 

lagging costs and subcontracting costs.

U Assistant Administrator for 

Administration and 

Resources Management

$169

5 15 Develop and implement procedures to maintain a 

complete contract file when transferred between 

contracting officers.

U Assistant Administrator for 

Administration and 

Resources Management

6 15 Require that T&M contracts abide by FAR 

requirements, such as having a determination and 

findings document and a government quality 

assurance surveillance plan.

U Assistant Administrator for 

Administration and 

Resources Management

7 15 Conduct a contract-wide review of contract 

EP-W-07-067 to determine if government property 

was improperly disposed.

U Assistant Administrator for 

Administration and 

Resources Management

8 15 Develop and implement new or additional training 

for EPA acquisition personnel to communicate new 

requirements or expectations that arise from the 

recommendations and findings in this report.

U Assistant Administrator for 

Administration and 

Resources Management

1 O = Recommendation is open with agreed-to corrective actions pending.

C = Recommendation is closed with all agreed-to actions completed.

U = Recommendation is unresolved with resolution efforts in progress.
14-P-0272 18

Appendix A

Agency Response to Draft Report

DEC 9 2013

OFFICE OF

ADMINISTRATION

AND RESOURCES

MANAGEMENT

MEMORANDUM

SUBJECT: Response to Draft Audit Report OPE-FY11-0013: Weak Contract Management 

and Oversight Put EPA at Risk of Not Receiving Services for Which the Agency 

Paid 

FROM: Craig E. Hooks, Assistant Administrator

TO: Carolyn Copper, Assistant Inspector General

Office of Program Evaluation

OARM has reviewed draft OIG audit OPE-FY11-0013, and provides the following response to 

audit findings and recommendations.

Recommendation 1: Require that activities, personnel and subcontractors proposed by 

contractors at the contract and task order levels be officially endorsed in task order 

documentation. 

Recommendation 2: Require that changes in contractor personnel and subcontractors at the 

contract and task order levels are officially established by modification. 

OARM Response:

OARM proposes the following alternative corrective actions to resolve this recommendation.

The OIG’s findings and recommendations do not reflect contract terms and conditions. The OIG 

references a Federal Acquisition Regulation clause (52.232-7 “Payments Under Time-andMaterials and Labor-Hour-Contracts”) not used in the audited contract. EPAAR 1552.232-73 

“Payments – fixed rate services contract” governed the invoice review and approval process in 

the contract. 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460
14-P-0272 19

In spite of this disconnect between the contract terms and conditions and the audit, the EPA is 

assessing policies and clauses related to EPAAR 1552.232-73 for consistency with FAR policies 

and related clauses governing time-and-materials and labor-hour contracts. This assessment will 

ensure consistency with the FAR, including the requirements for verifying personnel 

qualifications which may be prescribed in contracts, during the invoice review and approval 

process. 

Additionally, as acknowledged on other recent OIG audits of fixed-rate contracts, EPA is 

developing performance-based contracting guidance and associated training. This guidance will 

prescribe that labor categories be defined by duties and responsibilities rather than by personnel 

qualifications, which will mitigate the circumstances associated with this finding. 

Finally, for key personnel identified in accordance with contract terms and conditions, pursuant 

to EPAAR clause 1552.237-72 “Key Personnel” individual staff qualifications are already 

verified prior to award, and also in instances where the contractor may replace staff. 

Based upon the above explanation, OARM offers these alternative corrective actions to resolve 

this recommendation. 

______________________________________________________________________________

Recommendation 3: Require that Contracting Officer Representatives document a thorough and 

consistent review of work plans, Minimal Program Requirements, invoices, receipts and 

deliverables. 

OARM Response:

OARM agrees and has already implemented the following policies which address the 

circumstances supporting this recommendation. These policies ensure agency CORs consider 

their contract management responsibilities (which includes payment) as part of the acquisition 

planning process, and receive training on the proper review and disposition of invoices. 

1. OARM implemented Interim Policy Notice (IPN) 12-03 “Acquisition Planning” on October 

14, 2013, at http://oamintra.epa.gov/node/8?q=node/158. Although acquisition planning is a preaward activity, decisions made in the acquisition planning phase may either hinder or facilitate 

post-award contract management activities. A critical goal of Interim Policy Notice 12-03 is to 

ensure proper acquisition planning occurs in order to result in well defined requirements that will 

enhance the agency’s ability to receive mission critical goods and services, and ensure those 

goods and services meet contract performance requirements. In the context of audit findings, IPN 

12-03 includes a discussion on service contracting. 

2. Additionally, on September 27, 2013, OAM issued IPN 13-03 “EPA Federal Acquisition 

Certification for Contracting Officer’s Representatives Three-Tiered Program” at 

http://oamintra.epa.gov/node/8?q=node/158. This policy establishes EPA’s COR certification 

and training requirements beginning in October 2013, and contains a requirement for CORs to 
14-P-0272 20

take four Continuous Learning Points in the financial management of contracts, to either obtain 

or maintain certification. This class is designed to assist CORs on the financial management of 

contracts by providing basic knowledge and advice for managing contract funds during the 

invoice payment and close-out processes. 

3. Lastly, OARM has begun developing a Contract Management Plan Guide which is a logical 

follow-on to the above-described acquisition planning policy, and will establish processes and 

procedures in support of post-award contract administration activities. 

OARM will use the Self-Assessment and Peer Review components of the Balanced Scorecard 

Performance Measurement and Management Program to monitor implementation and 

compliance with these policies, and believes these corrective actions fully satisfy the above 

recommendation. 

 

______________________________________________________________________________

Recommendation 4: Beginning with the questionable G&A expenses ($5,590) and 

subcontractor charges ($163,969) in the invoices we sampled, conduct a review of all invoices 

from contract EP-W-07-067 to determine if the EPA overpaid for G&A costs, other direct costs, 

lagging costs, and subcontracting costs. 

OARM Response:

OARM agrees with this recommendation, and will initiate an internal financial management 

review of contract EP-W-07-067, and take action based upon the review results. The FMR 

objectives are attached. OARM believes that this corrective action fully satisfies the above 

recommendations. 

______________________________________________________________________________

Recommendation 5: Develop and implement procedures to maintain a complete contract file 

when transferred between contracting officers. 

Recommendation 6: Require that Time and Materials contracts abide by FAR requirements, 

such as having a determination and findings document and a government quality assurance 

surveillance plan. 

Recommendation 8: Develop and implement new or additional training for EPA acquisition 

personnel to communicate new requirements or expectations that arise from the 

recommendations and findings in this report.

OARM Response:

OARM agrees and has already implemented the following policies which address the 

circumstances supporting these recommendations.
14-P-0272 21

With regard to contract file documentation, OARM has self-identified inadequate file 

documentation as a recurring finding under the BSC PMMP Peer Review program, and has 

directed a number of corrective actions. Updated policies include excerpts from the OAM 

Acquisition Handbook “Update to Acquisition Handbook 4.1 Reviews, Concurrences, and 

Checklists” (entire document at http://oamintra.epa.gov/node/47, and updated via IPN 12-03 

“Acquisition Planning”), which contain contract checklists of documents to be filed in the 

official contract file. 

With regard to ensuring T&M contracts are supported by a determination and findings and 

quality assurance surveillance plan, again the above described policies address both these 

requirements. The OAM Acquisition Handbook 4.1 update includes a level above review for all 

actions (item 2), and Service Center Manager approval for D&F’s in support of T&M contracts 

(item 23). 

Additionally, IPN 12-03 “Acquisition Planning”, includes guidance on contract surveillance 

under service contracts. Lastly, OARM has begun developing a Contract Management Plan 

Guide which is a logical follow-on to the above-described acquisition planning policy, and will 

establish procedures in support of post-award contract administration activities, including 

contract surveillance.

With regard to communicating and training acquisition personnel on these policies, OAM has 

already been using the self-assessment and peer review components of the BSC PMMP to 

identify knowledge and training weaknesses among agency staff, and has implemented solutions 

(training, policy) to address those shortcomings. OARM will continue to monitor and ensure 

compliance with these policies through the self-assessment and peer review components of the 

BSC PMMP.

Based upon the above discussion, OARM believes these corrective actions fully satisfy the above 

recommendation. 

______________________________________________________________________________

Recommendation 7: Conduct a contract-wide review of contract EP-W-07-067 to determine if 

government property was improperly disposed. 

OARM Response:

OARM agrees with this recommendation, and will work with OARM /FMSD to investigate 

property disposition on the above contract, and take action based upon review results. 

Accordingly, OAM believes this corrective action fully satisfies the above recommendation. 

Please contact John Bashista, director, Office of Acquisition Management at (202) 564-4310 if 

you have any questions regarding this response. 

Attachment
14-P-0272 22

cc:

Eric Lewis

Byron Shumate

Nanci Gelb

John Bashista

Lisa Maass

John Showman

Steve Blankenship

Brandon McDowell

Marian P. Cooper 
14-P-0272 23

Appendix B

OIG Response to Agency Comments

To address the agency’s comments, we broke its responses to the various recommendations into

multiple parts. A breakdown of the agency comments and our responses to those comments follow.

Recommendation #1: Require that activities, personnel and subcontractors proposed by 

contractors at the contract and task order levels be officially endorsed in task order documentation.

Agency Response: OARM proposes the following alternative corrective actions to resolve this 

recommendation:

1.1. “The EPA is assessing policies and clauses related to EPAAR 1552.232-73 for consistency with 

FAR policies and related clauses governing time-and-materials and labor-hour contracts. This 

assessment will ensure consistency with the FAR, including the requirements for verifying personnel 

qualifications which may be prescribed in contracts, during the invoice review and approval process.”

1.2. “Additionally, as acknowledged on other recent OIG audits of fixed-rate contracts, EPA is 

developing performance-based contracting guidance and associated training. This guidance will 

prescribe that labor categories be defined by duties and responsibilities rather than by personnel 

qualifications, which will ensure consistency with the FAR, including the requirements for verifying 

personnel qualifications which will mitigate the circumstances associated with this finding.”

1.3. “Finally, for key personnel identified in accordance with contract terms and conditions, pursuant 

to EPAAR clause 1552.237-72 “Key Personnel” individual staff qualifications are already verified 

prior to award, and also in instances where the contractor may replace staff.”

OIG Evaluation for Recommendation 1: The recommendation is unresolved.

Based on the information provided, it is not clear how the information addresses the intent of the 

recommendation:

 Proposed Action 1.1: The OIG agrees that the agency should require verification of personnel 

qualifications, including during the invoice review and approval process. However, it is not clear 

how the proposed consistency review between the FAR and EPAAR addresses our finding, as 

neither require task order awards to clearly identify activities, personnel and subcontractors.

 Proposed Action 1.2: It is unclear how developing performance-based contracting guidance will 

mitigate the circumstances associated with this finding. Contract EP-W-07-067 is a T&M contract, 

not a performance-based contract. 

 Proposed Action 1.3: The OIG agrees that EPAAR 1552.237-72 provides a mechanism for 

replacement and establishment of key personnel at the contract level. However, it does not address 

key personnel, other contractor personnel or subcontractors at the task order level. 

In its response to the final report, the agency needs to include the following:

 A statement of agreement or disagreement with the recommendation.

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any planned corrective actions.
14-P-0272 24

Recommendation #2: Require that changes in contractor personnel and subcontractors at the 

contract and task order levels are officially established by modification.

Agency Response: OARM proposes the following alternative corrective actions to resolve this 

recommendation:

2.1. “The EPA is assessing policies and clauses related to EPAAR 1552.232-73 for consistency with 

FAR policies and related clauses governing time-and-materials and labor-hour contracts. This 

assessment will ensure consistency with the FAR, including the requirements for verifying personnel 

qualifications which may be prescribed in contracts, during the invoice review and approval process.”

2.2. “Additionally, as acknowledged on other recent OIG audits of fixed-rate contracts, EPA is 

developing performance-based contracting guidance and associated training. This guidance will 

prescribe that labor categories be defined by duties and responsibilities rather than by personnel 

qualifications, which will ensure consistency with the FAR, including the requirements for verifying 

personnel qualifications, which will mitigate the circumstances associated with this finding.”

2.3. “Finally, for key personnel identified in accordance with contract terms and conditions, pursuant 

to EPAAR clause 1552.237-72 “Key Personnel” individual staff qualifications are already verified 

prior to award, and also in instances where the contractor may replace staff.”

OIG Evaluation for Recommendation 2: The recommendation is unresolved.

Based on the information provided, it is not clear how the information addresses the intent of the 

recommendation:

 Proposed Action 2.1: The OIG agrees that the agency should require verification of personnel 

qualifications, including during the invoice review and approval process. However, it is not clear 

how the proposed consistency review between the FAR and EPAAR addresses our finding that

personnel and subcontractors used in task orders were difficult to discern.

 Proposed Action 2.2: It is unclear how developing performance-based contracting guidance will 

mitigate the circumstances associated with this finding. Contract EP-W-07-067 is a T&M contract, 

not a performance-based contract. 

 Proposed Action 2.3: The OIG agrees that EPAAR 1552.237-72 provides a mechanism for 

replacement and establishment of key personnel at the contract level. However, it does not address 

(1) contractor personnel or subcontractors at the contract level; or (2) key personnel, other

contractor personnel or subcontractors at the task order level. 

In response to the final report, the agency needs to include the following:

 A statement of agreement or disagreement with the recommendation.

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any planned corrective actions.
14-P-0272 25

Recommendation #3: Require that CORs document a thorough and consistent review of work 

plans, MPRs, invoices, receipts and deliverables.

Agency Response: “OARM agrees and has already implemented the following policies which 

address the circumstances supporting this recommendation. These policies ensure agency CORs 

consider their contract management responsibilities (which includes payment) as part of the 

acquisition planning process, and receive training on the proper review and disposition of invoices.”

3.1. “OARM implemented Interim Policy Notice (IPN) 12-03 “Acquisition Planning” on October 14, 

2013, at http://oamintra.epa.gov/node/8?q=node/158. Although acquisition planning is a pre-award 

activity, decisions made in the acquisition planning phase may either hinder or facilitate post-award 

contract management activities. A critical goal of Interim Policy Notice 12-03 is to ensure proper 

acquisition planning occurs in order to result in well defined requirements that will enhance the 

agency’s ability to receive mission critical goods and services, and ensure those goods and services 

meet contract performance requirements. In the context of audit findings, IPN 12-03 includes a 

discussion on service contracting.”

3.2. “Additionally, on September 27, 2013, OAM issued IPN 13-03 “EPA Federal Acquisition 

Certification for Contracting Officer’s Representatives Three-Tiered Program” at 

http://oamintra.epa.gov/node/8?q=node/158. This policy establishes EPA’s COR certification and 

training requirements beginning in October 2013, and contains a requirement for CORs to take four 

Continuous Learning Points in the financial management of contracts, to either obtain or maintain 

certification. This class is designed to assist CORs on the financial management of contracts by 

providing basic knowledge and advice for managing contract funds during the invoice payment and 

close-out processes.” 

3.3. “Lastly, OARM has begun developing a Contract Management Plan Guide which is a logical 

follow-on to the above-described acquisition planning policy, and will establish processes and 

procedures in support of post-award contract administration activities.” 

3.4. “OARM will use the Self-Assessment and Peer Review components of the Balanced Scorecard 

Performance Measurement and Management Program to monitor implementation and compliance 

with these policies.”

OIG Evaluation for Recommendation 3: The recommendation is unresolved.

Based on the information provided, it is not clear how the information addresses the intent of the 

recommendation:

 Proposed Action 3.1: The OIG reviewed IPN 12-03 and could find nothing relevant to 

documentation of COR reviews. Further, the OIG found nothing in the discussion on service 

contracting in IPN 12-03 Section L relevant to the context of audit findings.

 Proposed Action 3.2: The OIG reviewed IPN 13-03 and found mandatory coursework for

instructing CORs in financial management. This is not the same as requiring them to document 

their reviews.

 Proposed Action 3.3: The OIG is supportive of the formulation of a Contract Management Plan 

Guide. However, the assurance that it will establish processes and procedures in support of postaward contract administration activities, as described, does not provide sufficient detail to address 

COR documentation of reviews.

 Proposed Action 3.4: We appreciate OARM’s commitment to following up on its implementation 

and compliance with the Balanced Scorecard Performance Measurement and Management 

Program. However, as discussed above, the proposed actions do not meet the intent of the 

recommendation.
14-P-0272 26

In response to the final report, the agency needs to include the following:

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any planned corrective actions.

In the recommendation, and in the context of the report, the OIG uses MPRs as the abbreviation for 

monthly progress reports. However, in the agency’s response, it refers to MPRs as minimal program 

requirements. The agency needs to take note of this, as it could affect its interpretation of the 

recommendation.

Recommendation #4: Beginning with the questionable G&A expenses ($5,590) and subcontractor 

charges ($163,969) in the invoices we sampled, conduct a review of all invoices from contract EP-W07-067 to determine if the EPA overpaid for G&A costs, other direct costs, lagging costs, and 

subcontracting costs.

Agency Response: 

“OARM agrees with this recommendation, and will initiate an internal financial management review 

of contract EP-W-07-067, and take action based upon the review results.”

OIG Evaluation for Recommendation 4: The corrective action is acceptable, but the 

recommendation is unresolved until an estimated completion date is provided.

Recommendation #5: Develop and implement procedures to maintain a complete contract file 

when transferred between contracting officers.

Agency Response: 

“OARM agrees and has already implemented the following which address the circumstances 

supporting this recommendation.”

“With regard to contract file documentation, OARM has self-identified inadequate file documentation 

as a recurring finding under the BSC PMMP Peer Review program, and has directed a number of 

corrective actions. Updated policies include excerpts from the OAM Acquisition Handbook “Update 

to Acquisition Handbook 4.1 Reviews, Concurrences, and Checklists” (entire document at 

http://oamintra.epa.gov/node/47, and updated via IPN 12-03 “Acquisition Planning”), which contain 

contract checklists of documents to be filed in the official contract file.”

OIG Evaluation for Recommendation 5: The recommendation is unresolved.

The OIG reviewed the updates to Acquisition Handbook 4.1 and was unable to locate any requirement 

specific to the recommendation to develop and implement procedures to maintain a complete contract 

file when transferred between contracting officers.

In its response to the final report, the agency needs to include the following:

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any planned corrective actions.

 A separate narrative for each recommendation. The agency used one narrative to respond to 

recommendations 5, 6 and 8, and it is unclear which components of the proposed actions apply to 

which recommendations.
14-P-0272 27

Recommendation #6: Require that T&M contracts abide by FAR requirements, such as having a 

determination and findings document and a government quality assurance surveillance plan.

Agency Response: “OARM agrees and has already implemented the following which address the 

circumstances supporting this recommendation.”

6.1. “With regard to ensuring T&M contracts are supported by a determination and findings and 

quality assurance surveillance plan, again the above described policies (in previous 

recommendations) address both these requirements. The OAM Acquisition Handbook 4.1 update 

includes a level above review for all actions (item 2), and Service Center Manager approval for 

D&F’s in support of T&M contracts (item 23).” 

6.2. “Additionally, IPN 12-03 “Acquisition Planning”, includes guidance on contract surveillance 

under service contracts.”

6.3. “Lastly, OARM has begun developing a Contract Management Plan Guide which is a logical 

follow-on to the above-described acquisition planning policy, and will establish procedures in support 

of post-award contract administration activities, including contract surveillance.”

OIG Evaluation for Recommendation 6: The recommendation is unresolved.

Based on the information provided, it is not clear how the information addresses the intent of the 

recommendation:

 Proposed Action 6.1: Though the Assignment Handbook update requires Service Center Manager 

approval for a determinations and findings document in support of T&M contracts, the FAR (i.e., 

FAR 16.601(d)) requires a T&M determinations and findings document approval by the head of

the contracting activity, not just the Service Center Manager. 

 Proposed Action 6.2: The referenced guidance appears to apply solely to performance-based 

service contracts, not T&M contracts. 

 Proposed Action 6.3: The OIG is supportive of the formulation of a Contract Management Plan 

Guide. However, the assurance that it will establish processes and procedures in support of postaward contract administration activities, as described, does not provide sufficient detail to address 

the need for contract surveillance.

In response to the final report, the agency needs to include the following:

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any planned corrective actions.

 A separate narrative for each recommendation. The agency used one narrative to respond to 

recommendations 5, 6 and 8, and it is unclear which components of the proposed actions apply to 

which recommendations.
14-P-0272 28

Recommendation #7: Conduct a contract-wide review of contract EP-W-07-067 to determine if 

government property was improperly disposed.

Agency Response: “OARM agrees with this recommendation, and will work with OARM /FMSD to 

investigate property disposition on the above contract, and take action based upon review results.”

OIG Evaluation for Recommendation 7: The corrective action is acceptable, but the 

recommendation is unresolved until an estimated completion date is provided.

Recommendation #8: Develop and implement new or additional training for EPA acquisition 

personnel to communicate new requirements or expectations that arise from the recommendations 

and findings in this report.

Agency Response: 

“OARM agrees and has already implemented the following policies which address the circumstances 

supporting these recommendations.”

“With regard to communicating and training acquisition personnel on these policies, OAM has 

already been using the self-assessment and peer review components of the BSC PMMP to identify 

knowledge and training weaknesses among agency staff, and has implemented solutions (training, 

policy) to address those shortcomings. OARM will continue to monitor and ensure compliance with 

these policies through the self-assessment and peer review components of the BSC PMMP.”

OIG Evaluation for Recommendation 8: The recommendation is unresolved.

Based on the information provided, it is not clear how the information addresses the intent of the 

recommendation. We are supportive of OARM’s proactive self-identification of training needs, but the 

draft report has also identified training needs.

In response to the final report, the agency needs to include the following:

 Corrective actions which are responsive to the recommendation or clarification as to why the 

proposed actions are responsive.

 An estimated completion date for any proposed corrective actions.

 A separate narrative for each recommendation. The agency used one narrative to respond to 

recommendations 5, 6 and 8, and it is unclear which components of the proposed actions apply to 

which recommendations.
14-P-0272 29

Appendix C

Distribution

Office of the Administrator

Assistant Administrator for Administration and Resources Management

Agency Follow-Up Official (the CFO)

Agency Follow-Up Coordinator

General Counsel

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for External Affairs and Environmental Education 

Principal Deputy Assistant Administrator, Office of Administration and Resources Management

Director, Office of Acquisition Management, Office of Administration and 

Resources Management

Director, Office of Administration, Office of Administration and Resources Management

Director, Office of Policy and Resources Management, Office of Administration and 

Resources Management

Deputy Director, Office of Acquisition Management, Office of Administration and 

Resources Management

Deputy Director, Office of Policy and Resources Management, Office of Administration and 

Resources Management

Director, Headquarters Procurement Operations Division, Office of Acquisition Management,

Office of Administration and Resources Management

Audit Follow-Up Coordinator, Office of Administration and Resources Management

Audit Follow-Up Coordinator, Office of Acquisition Management, Office of Administration and

Resources Management